Prince George’s court tightens rules on structured-settlement buyouts

The Prince George’s County Circuit Court has implemented significant reforms to how it handles companies’ petitions to purchase settlement payments amid mounting scrutiny of an industry that critics say profits from poverty and desperation.

All sellers must now appear at hearings where a judge decides whether the proposed deal is in their best interest. Independent professional advisers, who are required by Maryland law to advise settlement recipients, must also now appear at the hearings. All petitions must now be filed using the seller’s full name, rather than initials. And Judge Herman C. Dawson, who heard the petitions to purchase structured-settlement payments, no longer presides over the transactions.

The changes come as criticism of companies that purchase settlement payments is mounting following a report in The Washington Post last month that showed firms routinely buy payments belonging to victims of lead-paint poisoning for dimes on the dollar.

Members of Congress have since called for investigations. Maryland lawmakers have urged stronger legislation. And officials with the state Court of Appeals Standing Committee on Rules of Practice and Procedure this month said it is drafting rules to “ensure accountability and transparency during these proceedings.”

The latest critic is Prince George’s County Administrative Judge Sheila R. Tillerson Adams. She has reviewed numerous cases filed by a company called Access Funding. The Post last month reported that the Chevy Chase company petitioned Prince George’s County Circuit Court more than 170 times since 2013. The cases often involved victims of lead-paint poisoning, who were overwhelmingly black and poor. Dawson, who didn’t respond to requests for comment, approved the petitions at a rate of roughly 90 percent.

Adams now says that the petitions require more scrutiny. She was troubled by what she called the “commonality” among the cases. The same independent adviser worked on a large number of the Access deals. State law specifies that the adviser cannot be affiliated with the purchasing company.

“When you look at the files and see the commonality of the quote-on-quote independent adviser, you see the cases require a different level of scrutiny,” she said.

Adams said the way in which Access Funding attorney Anuj Sud filed some of the cases also concerned her. Nearly 80 of Access Funding’s petitions were filed using the initials of the seller. Relevant information — ages, addresses, signatures, names — were redacted from some of those records.

“When I looked at these cases, and I saw the same attorney and the same adviser and the initials and no reason for them to be filed with initials and no reason that I dictated that these cases should be redacted, that was a cause of concern,” Adams said. “And there were many changes that were implemented.”

Sud, a College Park attorney who worked as a clerk for two Prince George’s judges between 2004 and 2006, didn’t return several requests for comment.

Access Funding chief executive Michael Borkowski also didn’t return requests for comment. But he said in a statement in May that using initials is standard practice across the industry. “Similar to much of our competition, and at the request of many of our annuitant clients to keep their personal and financial information private, during [2014] Access Funding began filing using annuitant initials and redacting personal and financial information from the public documents,” he said.

The practice of filing a petition using the seller’s initials is symptomatic of the lengths companies undertake to ensure competing firms don’t poach clients with structured settlements by trolling online records, experts said. These agreements, as opposed to traditional settlements, eke out payments across decades so as to protect vulnerable recipients from immediately spending their compensation.

“It’s a very competitive industry,” said Bethesda attorney Elyse Strickland, who has filed scores of petitions to purchase structured-settlement payments in counties across Maryland. “And so you want to protect your business and your file. That’s a way that companies protect themselves from other companies.”

Loopholes in Maryland law can also benefit the companies. Unlike New York and Oregon, for example, Maryland doesn’t make purchasing companies file their petitions in the seller’s county of residence, which could make it easier for annuitants to appear in court. Critics say this omission also gives rise to a practice called “forum shopping,” in which purchasing companies seek out less-scrutinous judges. Those firms “find the squeaky wheels, where things aren’t as enforced as much . . . and the judge simply looks at the affidavit,” said John Darer, who operates a blog monitoring the industry.

Petitions involving Maryland’s lead victims cluster in Montgomery, Howard and Prince George’s counties — anywhere but Baltimore City, the jurisdiction where most of the lead victims live. Access Funding says it has overwhelmingly filed in Prince George’s County because that’s where its attorney’s office is located.

Companies working Baltimore’s streets try to get a leg up on the competition any way they can — with advertisements, referrals, and by searching for annuitants in court records.

In interviews, seven victims of lead-paint poisoning who had sold payments complained about how often purchasing companies call them. Some changed their telephone numbers. Others began ignoring calls from certain numbers. Others said they felt like targets.

In August 2009, Tamika Bridgers was awarded a $700,000 settlement as a result of a lead-paint lawsuit. In late 2012, she struck her first deal with purchasing company J.G. Wentworth, which logged her name in the public record. Since then, Bridgers said, companies have hounded her with phone calls. She ultimately had to change her phone number.

“They try to say they can give a better deal,” Bridgers recalled several months ago in an interview. “But it don’t matter who you go with, they’re all the same.” She added: “I was a fool. I don’t want to talk about it anymore, because the more I talk about it, the more I get mad.”

In all, Bridgers has done at least six structured-settlement deals. Four have been with Access Funding. But you wouldn’t know that by placing her name into the Maryland court search. That’s because two of the deals that Access Funding filed only used her initials. One called her “Tamika B” and another called her “T.B.”

The day Bridgers was called T.B. in Prince George’s County Circuit Court came last April. That morning, Dawson had 11 Access Funding petitions to purchase structured-settlement payments on his docket. Sud was present representing Access, but none of the sellers attended the hearing. Each deal was filed using the seller’s initials.

One was Lydell Todman. He wanted to sell $1.7 million worth of his settlement — which had a value of $1.3 million — for about $330,000, or about 25 cents on the dollar. His case was filed under “N.T.”

No one objected to the proposed deals. And within four minutes, according to an audio recording of the hearing, Dawson approved all 11 deals.